D2P2 (Direct to Phase II)

What is Direct to Phase II (D2P2)?

Direct to Phase II is an SBIR award mechanism that lets a small business skip the traditional Phase I feasibility study and propose directly into a Phase II prototype effort. The Department of Defense is the most prominent user of D2P2, but other agencies have run similar mechanisms under their SBIR programs.

Definition

D2P2 awards substitute prior, demonstrated R&D evidence for the Phase I feasibility study. To qualify, a small business documents that work substantially equivalent to a Phase I has already been completed — typically through internal R&D, a prior non-SBIR contract, a CRADA, or non-government investment — and submits that evidence in the proposal package. If the agency accepts the evidence, the company can compete for a Phase II award without first having run a Phase I.

Key Points

• Substitutes evidence for Phase I. D2P2 does not skip the feasibility requirement; it accepts other documented work in place of a formal Phase I.
• Same Phase II eligibility rules. Size, ownership, and PI primary-employment rules that apply to standard SBIR Phase II awards still apply.
• DOD is the most active user. DOD's Direct-to-Phase-II mechanism is part of the standard DSIP submission flow, with specific BAAs and topic flags that indicate D2P2 eligibility.
• Strong fit for companies with non-SBIR R&D history. Companies that have already received OTA, BAA, or commercial R&D investment toward a defense-relevant prototype are often well-positioned for D2P2 because the evidence of equivalent prior work is already in hand.
• Not a way to escape competition. D2P2 awards are still competitively selected. Skipping Phase I removes the feasibility checkpoint but does not change the bar for a successful Phase II proposal.

Practical Examples

1. Commercial dual-use company moves to DOD. A startup that has built a working drone autonomy prototype with venture capital and one prior NASA STTR has substantial evidence of feasibility. Rather than submit a DOD Phase I, they pursue a D2P2 on an Air Force topic, using the existing prototype and prior R&D as their Phase I equivalent.
2. Academic spinout with prior CRADA work. A university spinout has completed a Cooperative Research and Development Agreement with an Army lab on the underlying science. They use the CRADA outputs as the Phase I equivalent and propose a D2P2 to build a transition-ready prototype.
3. Non-government R&D feeding a federal program. A small business has internally funded the development of a new sensor technology to a TRL 4-5 maturity, with documented experimental results. They submit a D2P2 proposal to a DOD topic, using the internal R&D report and test data as their feasibility-equivalent evidence.